What changed in this filing

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Item 1. Business

2021-06-30 compared with 2020-07-29 · 42 added, 33 removed, 222 unchanged (25% of the section changed)

12 unchanged sentences

The Company’s technology is the key element in enhancing the functionality and performance of many electronic systems.

The Company’s principle end markets are satellite payloads and precision time for terrestrial secure command control and communications systems.

The Company’s principal end markets are time and frequency generation and distribution systems for use in satellite payloads and terrestrial secure command control and communications systems.

For the satellite market, the Company has a unique legacy of providing master timing systems, power converters, and frequency generation, synthesis and distribution systems.

1 unchanged sentence

Government end-use.

Currently, there are approximately two thousand satellites with varying remaining useful lives operating in Geostationary, Medium and Low Earth Orbits.

Currently, there are approximately 3,400 satellites with varying remaining useful lives operating in Geostationary, Medium and Low Earth Orbits.

government operates approximately 1,900 of these.

2 unchanged sentences

Government is expected to contract options for additional GPS III satellites, and the Company is well positioned to compete for the onboard clock ensemble with its high-precision digital Rubidium atomic frequency standard.

For the terrestrial secure command control and communications systems market, the Company’s products support multiple C4ISR counter measures and EW applications for the U.S.

For the terrestrial secure command control and communications systems market, the Company’s products support multiple C4ISR and EW applications for the U.S.

Government on land, sea and air-borne platforms.

Recently identified threats to the communication capabilities of U.S.

Government facilities through jamming, multi-path or “spoofing” global positioning systems (“GPS”) signals may be mitigated by the Company’s technologies.

Government facilities through jamming or “spoofing” global positioning systems (“GPS”) signals may be mitigated by the Company’s technologies.

In addition, similar types of threats to the public and enterprise networks have been identified by the U.S.

2 unchanged sentences

To address these markets, the Company has several corporate entities which operate under two reportable segments primarily based on the geographic locations of its subsidiaries.

The two reportable segments are (1) FEI-NY, which includes the subsidiaries FEI Government Systems, Inc., FEI Communications, Inc., Frequency Electronics, Inc.

Asia (“FEI-Asia”), classified as an Asset Held for Sale in fiscal year 2019, (see Note 2 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K (the “Consolidated Financial Statements”) for details) and FEI-Elcom Tech, Inc.

The two reportable segments are (1) FEI-NY, which includes the subsidiaries FEI Government Systems, Inc., FEI Communications, Inc., and FEI-Elcom Tech, Inc.

(“FEI-Elcom”) and (2) FEI-Zyfer, Inc.

1 unchanged sentence

Frequency Electronics has made a strategic decision to focus on satellite payloads, C4ISR and EW market segments, because these business areas represent significant opportunities for revenue growth.

Accordingly, in fiscal year 2019 the Company classified FEI-Asia as an Asset Held for Sale.

FEI-NY – U.S.

4 unchanged sentences

FEI-Elcom’s RF microwave technology has also been utilized to develop new products for application in the Company’s satellite payload end market.

The Company has consolidated FEI-Elcom’s manufacturing capabilities with other FEI-NY operations in an effort to reduce costs and improve margin.

The Company began consolidating FEI-Elcom’s manufacturing capabilities into its FEI-NY operations in 2000, in an effort to reduce costs and improve margin.

These efforts continue.

FEI-Zyfer - Precision time references for terrestrial secure communications and command and control, and frequency products that incorporate GPS technology are manufactured by the Company’s subsidiary, FEI-Zyfer.

22 unchanged sentences

Government customers and collaborates with FEI-NY on joint product development activities.

During fiscal years 2020 and 2019, approximately 77%, of the Company’s consolidated revenues were from products sold by the FEI-NY segment.

In fiscal years 2020 and 2019, sales for the FEI-Zyfer segment were 26% and 25% of consolidated revenues, respectively.

During fiscal years 2021 and 2020, approximately 78% and 77%, respectively, of the Company’s consolidated revenues were from products sold by the FEI-NY segment.

In fiscal years 2021 and 2020, sales for the FEI-Zyfer segment were 26% of consolidated revenues.

(The sum of annual sales percentages exceeds 100% due to intersegment sales.)

Consolidated revenues include sales to end-users in countries located outside of the U.S., primarily in Europe and China.

During fiscal years 2020 and 2019, foreign sales comprised 4%, of consolidated revenues.

During fiscal years 2021 and 2020, foreign sales comprised 3% and 4%, respectively, of consolidated revenues.

For segment information, see Note 13 to the Consolidated Financial Statements.

5 unchanged sentences

The Company expects to continue to generate substantial revenues from deployment of new and replacement satellites and other U.S.

Government/DOD applications including sales of ruggedized subsystems for moving platforms of the U.S.

Government/DOD applications including sales of ruggedized subsystems for mobile U.S.

military platforms.

Satellite Payloads

9 unchanged sentences

Government’s communication, intelligence and Precision Navigation and Timing (PNT) needs.

It is likely that the DOD will move to adopt smaller and less expensive satellites for LEO applications, necessitating adaptation of the Company’s products or development of new products to better suit this type of satellite architecture.

The Company previously manufactured the master clock for the Trident missile, the basic timing system for the Voyager I and Voyager II deep space exploratory missions and the quartz timing system for the Space Shuttle.

3 unchanged sentences

In addition to space-based programs, the Company’s proprietary products have been used in airborne and ground-based guidance, navigation, communications, radar, sonar and electronic countermeasures and timing systems.

The Company has developed and patented a low g-sensitivity (gravity) technology which offers a 100 times improvement in performance under shock, vibration and other environmental effects.

The Company has developed and patented a low acceleration-sensitive technology which offers an approximate 100 times improvement in performance under shock, vibration and other environmental effects as compared to devices not so designed.

Products are built in accordance with DOD standards and are in use on many of the U.S.

16 unchanged sentences

Government to ensure that the programs are completed.

However, the Company’s experience indicates that programs and/or product sales can be delayed due to periodic U.S.

Government appropriations cycles.

However, the Company’s experience indicates that programs and/or product sales can be delayed or canceled due to variations associated with periodic U.S.

Government appropriations cycles and shifting priorities.

Negotiations on U.S.

17 unchanged sentences

Government and to the public and enterprise networks through jamming, multi-path or “spoofing” GPS signals may be mitigated by FEI-Zyfer’s technologies and products.

High precision, ruggedized clocks combined with specialized software are essential for certain communication and operational security.

High precision, ruggedized clocks combined with specialized software are essential for the security of government communication and systems.

More than 91% of FEI-Zyfer’s revenues are derived from sales where the end user is the U.S.

1 unchanged sentence

Approximately 81% of the current backlog is expected to be filled during the Company’s fiscal year ending April 30, 2022.

As of April 30, 2020, there are no amounts included in backlog under cost-plus fixed-fee contracts that have not been funded.

As of April 30, 2021, there were no amounts included in backlog under cost-plus fixed-fee contracts that had not been funded.

The Company excludes from backlog those contracts or awards for which it has not received authorization to proceed.

1 unchanged sentence

The Company expects any partially funded contracts to become fully funded over time and will add the additional funding to its backlog at that time.

The backlog is subject to change for various reasons, including possible cancellation of orders, change orders, terms of the contracts and other factors beyond the Company’s control.

The backlog is subject to change for various reasons, including possible cancellation of orders, change orders, change in contract terms and other factors beyond the Company’s control.

Accordingly, the backlog is not necessarily indicative of the revenues or profits (losses) which may be realized when the results of such contracts are reported.

2 unchanged sentences

Sales to non-U.S.

end-users totaled approximately 4% of net revenues in fiscal years 2020 and 2019, respectively.

end-users totaled approximately 3% and 4% of net revenues in fiscal years 2021 and 2020, respectively.

The Company’s products are sold to both commercial and governmental customers.

2 unchanged sentences

Government end-use.

During fiscal year 2020, Lockheed Martin Corporation (“Lockheed Martin”), Northrop Grumman Company (“Northrop Grumman”), BAE Systems and L3Harris Technologies, Inc.

During fiscal year 2021, Northrop Grumman Company (“Northrop Grumman”) and Lockheed Martin Corporation (“Lockheed Martin”) each accounted for more than 10% of the Company’s consolidated revenues.

During fiscal year 2020, Lockheed Martin, Northrop Grumman, BAE Systems and L3Harris Technologies, Inc.

each accounted for more than 10% of the Company’s consolidated revenues.

During fiscal year 2019, Lockheed Martin accounted for more than 10% of the Company’s consolidated revenues.

The loss by the Company of any one of these customers could have a material adverse effect on the Company’s business.

2 unchanged sentences

Government contracts.

The Company purchases a variety of components such as transistors, resistors, capacitors, connectors and diodes for use in the manufacture of its products.

The Company is not dependent upon any one supplier or source of supply for any of its component part purchases and maintains alternative sources of supply for all of its purchased components.

The Company has found its suppliers generally to be reliable and price-competitive.

The Company purchases a variety of electrical and other components and materials for use in the manufacture of its products.

The Company is not dependent upon any one supplier or source of supply for any of its materials and maintains alternative sources of supply for all of its purchases.

The Company has found its suppliers generally reliable and price-competitive.

RESEARCH AND DEVELOPMENT

The Company’s technological leadership continues to be an essential factor as it pursues future growth in revenues and earnings.

The Company has focused its internal R&D efforts on improving the core physics and electronic packages in its time and frequency products, conducting research to develop new time and frequency technologies and capabilities, improving product manufacturability by seeking to reduce its production costs through product redesign and process improvements and other measures to take advantage of lower cost components.

The Company has focused its internal R&D efforts on improving the core physics and electronic performance in its time and frequency products, conducting research to develop new time and frequency technologies and capabilities, improving product manufacturability by seeking to reduce its production costs through product redesign and process improvements and other measures to take advantage of lower cost components.

The Company continues to focus a significant portion of its own resources and efforts on developing hardware for satellite (commercial and U.S.

13 unchanged sentences

In 2006, the Company obtained a basic patent for its low g-sensitivity technology which management believes will permit greatly enhanced performance of devices on moving platforms and under externally imposed shock or vibration.

The Company’s current patents run through 2026.

The Company experiences competition in all areas of its business.

9 unchanged sentences

The Company believes its ability to obtain raw materials, manufacture finished products, integrate them into systems and sub-systems and interface these systems with highly sophisticated end-user applications provides a strong competitive edge.

The Company employs approximately 220 full-time persons worldwide.

Due to the specialized nature of our business, our performance depends on identifying, attracting, developing, motivating, and retaining a highly skilled workforce in multiple areas, including engineering, science, manufacturing, information technology, cybersecurity and business development.

The Company develops its workforce using a fair recruiting process to select talented individuals that include competitive compensation and benefits.

The Company currently employs approximately 240 employees worldwide.

No employees are represented by labor unions.

Relationships with employees are favorable as reflected in high retention rates and increasing average length of service.

Due to low turnover of employees, the average age of the workforce is increasing with time.

Depending on growth in total employment and the average age of newly hired employees, replacement of key technical staff may be an issue in the future due to increased retirement.

Employee health and safety is a top priority.

The Company has provided all employees with detailed health and safety literature on COVID-19 and had implemented work from home policies at all locations for a period of time at the beginning of the pandemic for positions that were conducive to work from home in order to minimalize the manufacturing staff that remained in the buildings.

The Company has since reverted to almost normal operations.

OTHER ASPECTS

The Company’s business is not seasonal although it expects to experience some fluctuation in revenues during the second fiscal quarter as a result of summer holiday periods.

No unusual working capital requirements exist.

The Company’s U.S.

Government contracts are subject to FAR, which impose various requirements and failure to comply could potentially have consequences.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

7 unchanged sentences

Thomas McClelland

Vice President, Advanced Development and Chief Scientist

Senior Vice President and Chief Scientist

Adrian Lalicata

9 unchanged sentences

Prior to joining Comtech, Dr.

Sloane was President and CEO and a Director of Decision Sciences International Corporation, a privately-held advanced security and detection systems company, from August 2011 through January 2015.

Prior to that, he served as President and CEO and a Director of SRA International, Inc.

Sloane was President and Chief Executive Officer and a Director of Decision Sciences International Corporation, a privately-held advanced security and detection systems company, from August 2011 through January 2015.

Prior to that, he served as President and Chief Executive Officer and a Director of SRA International, Inc.

(“SRA”), an information solutions company.

He served as President and CEO of SRA from April 2007 through July 2011, during which time he helped lead the sale of SRA to a private equity firm.

He served as President and Chief Executive Officer of SRA from April 2007 through July 2011, during which time he helped lead the sale of SRA to a private equity firm.

Prior to joining SRA, he was Executive Vice President of Lockheed Martin's Integrated Systems & Solutions from June 2004 until April 2007.

14 unchanged sentences

McClelland’s title was modified to Vice President Advanced Development to describe his expanded role in the Company.

In January 2020 Mr.

McClelland’s title was modified to Senior Vice President and Chief Scientist.

Adrian Lalicata, age 74, joined the Company in 2006 as Vice President, RF & Microwave Systems.

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business